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Fitch: Azerbaijan's economy to grow by 4.9% this year, by 2.9% next year

13 November 2021 14:26 (UTC +04:00)

We project a general government surplus of 4.9% of GDP in 2021, following last year's deficit of 6.5%, with accelerating capex execution towards year-end lowering the surplus relative to the 9M21 (annualised) outturn of 5.4% of GDP. The large improvement in this year's fiscal balance has been driven by the higher oil price, strong tax receipts (up 12% yoy in 9M21) on the back of economic recovery and improved compliance, and the unwinding of pandemic support measures, according to the information of Fitch Ratings Agency, APA-Economics reports citing the Agency.

"We forecast the general government surplus to narrow to 1.1% of GDP in 2022 and return to a deficit of 1.0% in 2023. This largely reflects a lower oil price and faster execution of infrastructure spending on the territories reclaimed in the conflict with Armenia (to an average of 2.5% of GDP), but still compares favourably with the 'BB' median deficits of 4.0% and 3.5%, respectively. The government plans to introduce a revised fiscal rule in 2022 comprising an annual reduction in the non-oil primary balance and a debt target, the consistent implementation of which would help bolster fiscal buffers in the medium term," the information reads.